Month: September 2016

Pylons. Nobody really likes them, do they? They’re a bit ugly and you rather wish they weren’t there, ruining the view. Let’s be honest, power grid infrastructure is not pretty but there might soon be a case to do away with it, albeit for slightly better reasons than aesthetics.

Traditionally, the way to get power to large numbers of people has been to build more power plants, extending the transmission and distribution networks, and facilitating grid connections. And it remains true that this conventional system is the backbone of power provision in most countries but is it the way of the future?

In most developed countries, rates of electrification are extremely high, usually above 99% even in rural areas. In developing countries however, this number can be surprisingly low. 15% in Kenya, for example, dropping to only 5% in rural parts of the country. This means that a significant majority of the population live without access to grid electricity and are still dependent on polluting fuels such as diesel and kerosene, often expensive and time-consuming to acquire.

The challenge is to find the most effective and efficient way to get power to areas that currently go without.

Let’s think about phones for a moment. As with electricity and lighting, access to communication is seen as one of the key indicators of development. Similar to power, the traditional way of connecting homes and businesses via phone was to construct a huge amount of infrastructure dependent on thousands of miles of cable. But this is no longer the case, or at least not to the same extent, and especially not in developing countries.

With the advent of mobile phones came a reduced need for conventional landline infrastructure. In developed countries where the equipment was already in place, no one was going to go tearing up switching stations or telephone poles but the situation was a little different in countries where such infrastructure did not already exist. Communication analysts now predict that some developing countries will skip building the traditional phone network altogether because mobile is already so prolific and affordable. Whole countries are going wireless.

So why not do the same with power?

It used to be the case that on-site renewable power generation was unreliable, intermittent, and therefore not a realistic alternative to grid electricity or diesel generators. Today, however, there is a growing range of innovative renewable technologies that not only provide reliable power, but can compete with grid electricity on cost.

Great leaps in the efficiency of photovoltaic (PV) technology mean that the levelised cost of energy (LCOE) for African utility projects ranged between $0.13-0.26 per kilowatt-hour (/kWh) in 2013 and 2014, with utility-scale PV in South Africa reaching as low as $0.075/kWh. More recently, Zambia is set to sell solar power for as little as $0.062/kWh following the approval of two large scale PV projects as part of the World Bank’s ‘Scaling Solar’ programme.

With continued improvements in efficiency, and costs continuing to fall, the business case for adopting solar PV starts to look irresistible in areas with high levels of solar irradiance. These areas are largely concentrated between the Tropics, which is also where the majority of the world’s developing countries are located.

Companies like M-Kopa and BBOXX have cottoned on to this opportunity, both offering domestic, off-grid solar solutions that provide lighting and other electrical benefits to homes in East Africa. Buffalo Grid is using its solar-powered technology to power mobile phones in developing countries, offering both a service to end customers as well as a renewable business opportunity to kiosk owners.

This is all before we even think about alternative micro technologies such as small wind turbines. We should also not forget about key enabling technologies such as off-grid storage, but more on that in my next blog…

Everyone has heard of Bitcoin, the digital currency which is created and held electronically and most have heard of blockchain, the technology behind it. However, blockchain shouldn’t be confined solely to cryptocurrency and payments; it enables value to be transferred through a digitised system which cultivates trust.

What is blockchain?

The technology is most commonly understood through the paradigm of currency and payments, which stems from its relationship to Bitcoin. While it is not the only application for blockchain, its cryptocurrency genesis is probably the best place to start to get your head around what blockchain is and how it works.

Put simply, it is a distributed ledger that records ownership through a shared digital registry. A record in the chain can only be changed if the majority of those involved agree to the change, thus creating a new block in the chain whilst maintaining a record of all previous blocks. It’s safe, confidential and verifiable.

In the world of payments and transactions, it means they can happen faster (by removing the need for a central ledger such as The Bank of England) and more securely.

Indeed, the technology has the potential to disrupt the banking industry which is fully aware of the threat (and opportunity) this presents. Santander’s Innoventures predicts that block chain technologies “could reduce banks’ infrastructure costs […] by between $15-20 billion per annum by 2022.”[1] It is no wonder that the Bank of England and major global banks like JP Morgan, Santander and Barclays are investing time and money into blockchain technology.

However, the value of this technology extends far beyond Bitcoin and payments. A recent news article states that blockchain is a ‘machine for creating trust.’[2] Although trust is a key component of blockchain’s value, the verb ‘create’ is a misnomer. Rather than create trust, it decentralises it. Blockchain deconstructs the layers which exist within traditional systems where trust is a core function.

Payments are an obvious example of where blockchain has the potential to remove the need for centralised institutions authorising, verifying and acting as a trust arbiter. To focus on finance and crypto currencies, however, is to severely limit the true potential of blockchain.

The technology’s opportunity to disrupt lies in this decentralisation of trust and the digital transfer of assets and value it enables.

Blockchain outside of financial services

Before investing all of your savings in blockchain, do take note that some of these promised game-changing capabilities may never come to fruition, and, where they do, it could be a slow process. Nonetheless, it is a technology with a lot of promise and the potential to upheave traditional business models and create new ones.

Government institutions and the public digital databases they hold can operate more efficiently and securely with the use of blockchain technology. Land registries are a commonly cited application of blockchain being used to change how public databases are stored and updated. Sweden, for example, has recently launched a trial land registry system based on the technology, where real estate transactions are verified by blockchain. It authenticates contracts and securely stores the information.

Admittedly, a digital database confirming property ownership may not appear the most exciting thing from a UK perspective, but in countries such as India, Greece and Honduras, where land ownership disputes are commonplace, blockchain has the potential to transform legal ecosystems. The technology has the potential to be applied to electronic voting, tax returns, business registers, e-passports and to prove Intellectual Property ownership.

Beyond this, blockchain’s use to authenticate and authorise is resulting in a number of innovative companies utilising it as an anti-counterfeiting technology. It is being used to verify the provenance of fine art, authenticate high-end luxury goods and track supply chains. One start-up based in London, BlockVerify has focussed on using blockchain as an anti-counterfeiting technology and is gaining significant interest from the pharmaceutical world for its secure tracking of drug supply chains.

Where blockchain really seems interesting is when it is tied to those 4 words: the Internet of Things. Blockchain could become an integral component of virtual power plants, smart cities and device communication. A recent report by IBM entitled ‘Device Democracy’ sums up its power to save the future of the Internet of Things:

“Devices are empowered to autonomously execute digital contracts such as agreements, payments and barters with peer devices by searching for their own software updates, verifying trustworthiness with peers, and paying for and exchanging resources and services. This allows them to function as self-maintaining, self-servicing devices.”[3]

Devices could be connected to service providers utilising blockchain and following pre-configured smart contracts. Your smart fridge, for example, could automatically arrange a delivery from your supermarket when you are running low on milk and communicate the transaction automatically with your bank!

While blockchain technology is in its nascent stages of development, large companies are waking up to its value. RWE, the German power company, has partnered with a blockchain start-up to develop proof-of-concepts utilising the technology to lower expenses related to energy transmission. One interesting application explored in this partnership is blockchain-based smart contracts to authenticate billing for electric vehicle charging. The micro transactions blockchain enables, means that rather than pay for the number of hours at a docking station, the exact amount of electricity used can be charged.

Indeed, blockchain will be utilised as an important tool in our changing energy eco-system. Already there are examples of peer to peer grid balancing using blockchain. There are enterprises using blockchain to make pay-as-you-go solar in the developing world faster and more secure. The possibilities of blockchain are seemingly endless.

Up until now, blockchain has been disrupting the world of financial services.